Latin America and the Caribbean have long been left behind economically, eternally dependent on the developed and industrialized north. Now blockchain technology could represent an opportunity to try to bridge this gap.
The wrong policies of Latin America
In 2008's Falling Behind, Francis Fukuyama assembled a group of scholars to explain the reasons why the economic gap between Latin America and the United States grew so much when they were in such a similar position in the 1700s.
The authors determined that economic nationalism undertaken through import substitution, strict capital controls and suffocating regulation has made financial institutions dormant, their balance sheets anemic and their service ethic hostile to customers.
Latin American banks, insurance companies, consumer credit institutions, and cooperative agencies have long suffered from such inefficiencies and faced escapes by citizens during times of economic instability, hyperinflation and massive theft from account holder deposits .
In 2001, Peruvian sociologist Hernando de Soto hypothesized that reducing bureaucracy (such as the registration of land titles) and the regularization of businesses could free up trillions of dollars of investments throughout the developing world.
The blockchain solution to bridge the gap
Blockchain technology is the natural next step in this process. And the forgotten continent is a perfect test bed. By decentralizing the financial sector and placing trust in distributed ledgers, there will be less need for traditional, inefficient and corrupt intermediaries like the financial services giants who have long mismanaged the economy and damaged the interests of citizens.
Settle Network, which operates in Argentina, Mexico and Brazil - the economic powers of the region - sees great potential in banking services for massive regional communities made up of citizens unbanked e underbanked.
Chilean Kibernum provides blockchain solutions for the public and private sectors and is committed to corporate social responsibility, a luxury for many local companies that barely make a living. Marko Knezovic of Kibernum sees an opportunity for blockchain to create a new constitution in Chile, a process that “should be highly transparent and immutable”.
In the Caribbean, the Bahamas have adopted blockchain technology with the new Sand Dollar, becoming the first country in the world to implement a central bank digital currency. The Organization of Eastern Caribbean States is following suit in its digital transformation project, sponsored by the World Bank.
Haiti, the poorest country in the Western Hemisphere, is also taking action. Karl Seelig of Digital Davos and ChainBLX provides blockchain technology and an investment platform for the Andre Berto Fund and gold mining businesses.
This means tracking the supply chain to ensure no child labor is used and a micro-payment system to support fairer economic growth. Latin America and the Caribbean remain the most unequal continent in the world. But with blockchain solutions, some of the region's historic shortcomings can be undone.
